Coronavirus (COVID-19) has meant that the Government banks and other organisations are having to act quickly to offer help and support to companies and businesses affected. The government shut down of whole sectors of the economy is having a profound impact.
This page is updated on news from the Banks, the Government, Suppliers, Local Authorities and the Law. There is a lot of information contained but all for your convenience and benefit, so take time and care to read all.
Rishi Sunak has hinted that more help may be on the way via the"Targeted Income Grant Scheme" (TIGS) that aims to help the struggling self-employed.
TIGS support itself will be broken down for four specific sections of the self-employed community should it be introduced, with the following excluded groups potentially receiving support:
- The newly self-employed
- PAYE freelancers
- Ltd Company Directors
- Those excluded by the 50/50 rule in SEISS
Boris Johnson announces third national lockdown for England with schools closed and people requested to stay at home until mid-february. This replaces the tier system. Scotland and Northern Ireland are also under a new national lockdown. This all comes as cases are on the rise, leaving the NHS overwhelmed, despite vaccines being rolled out.
Following the introduction of a new Tier 4 restriction business leaders have asked for further exemptions on having to pay Business Rates.
Rishi Sunak has announced additional grants for businesses to survive the 3rd lockdown.
The grants include:
- £4k for businesses with a rateable value of £15k or under
- £6k for businesses with a rateable value between £15k and £51k
- £9k for businesses with a rateable value of over £51k
A further £594 million is also being made available for Local Authorities and the Devolved Administrations to support other businesses which are not eligible for the grants but may be affected by the restrictions.
Business in the retail, hospitality and leisure sectors are to receive up to £9,000 in one-off grants.
Furlough has now been extended until the end of April 2021
Winding up petitions cannot be served on companies over debts due to Covid-19 until March 2021.
The moratorium on commercial tenant convictions has been extended to March 2021. Although this only applies to arrears of rent that have accrued due to the Covid-19 Pandemic.
Additional support for hospitality in Wales is available. The Welsh Restrictions Business Fund will enable eligible businesses in the hospitality, tourism and leisure sectors which pay non-domestic rates (NDR) to access grants of up to £5,000. It is estimated around 60,000 businesses, with a rateable value of under £150,000 will receive this support.
Scottish retail, hospitality and leisure businesses, closed due to level 4 restrictions are to recieve up to £9k of 'one-off January' grants through the Strategic Business Framework Fund. It is set that it will be a one off grant of £9,000 for larger retail and leisure businesses on top of the 4-weekly £3,000 and a grant of £6,000 for smaller retail and leisure businesses on top of the 4-weekly £2,000.
Scotland to tighten lockdown measures including only allowing shops selling essential items - such as clothing, footwear, baby equipment, homeware and books - to offer click and collect, by which collections must be outdoors, with appointments staggered to avoid queuing. Takeaways can no longer allow customers indoors, and must instead operate from a hatch or doorway.
A financial support scheme for airports in England will open this month, according to the government. This comes as the aviation sector faces new Covid travel curbs. As of Monday 18 January, all travel corridors will close and all arrivals to the UK will need to isolate for up to 10 days (this being cut to 5 days following a negative test). Proof of a negative test being taken 72 hours prior travel is needed.
So what has been done?
The UK Government
Rushi Sunak announced a winter support plan which includes:
- Wage subsidies
- An extension to the VAT cut (now at 5%) for the hospitality and tourism industry, now in place until the end of March 2021
- Loan deadlines have been pushed back to allow flexibility for businesses. The scheme is called Pay as you grow. Bounce back loans are able to be extended from six to ten years. It is thought this will half the average monthly repayment. No companies can see their credit ratings affected, struggling firms can make interest-only repayments and anyone can apply to suspend repayments for up to six months
- The government guarantee for business interruption loans has been extended to ten years
- The extending deadline of all loan schemes will be pushed back until end of March 2021
- A new successor loan guarantee programme will be rolled out in January
- An extension to the self-employed grant
- Announcement of the New Jobs Support Scheme. This allows employers to keep employees in a job on short hours rather than making them redundant. It runs from December for six months.
Changes have been made to the Corporate Insolvency and Governance act, extending the measures put in place for the benefit of businesses.
Councils are being allocated funds to help hard-hit firms survive through lockdown through the £1.1 billion Additional Restrictions Grant. However, the level of funding is based on a formula of £20 per head of the local population — rather than the number of businesses in an area. Grants of £25,000 should become available.
- The Government launched a support scheme for the incomes of the self-employed, the Self-Employment Income Support Scheme (SEISS). Eligible applicants will receive a single grant worth 70% of average monthly trading profits for three months, capped at £6,570. Those self-employed who have been hit by the pandemic since 14 July can submit a claim i.e. shopkeepers affected by lockdown or builders unable to work on construction sites due to government restrictions.
- VAT is cut to 5% from 20% for all hospitality spend until 31st January 2021
- Rishi Sunak announces that there will be a £1000 per employee bonus paid to all employers that bring back a furloughed employee and the government will pay a proportion of wages to take on young employees as part of a Kickstart scheme
- The furlough scheme will continue until end of March 2021, with employees receiving 80% of their monthly wages up to £2,500. From August, employers must pay National Insurance and pension contributions, then 10% of pay from September before this percentage rises to 20% in October.
- From 26 May, there was an extension to the maximum loan size available through the CLBILS scheme from £50m to £200m. Note there will be restrictions on dividend and bonus payments by borrowers. More information can be found here.
- Businesses can apply for a Coronavirus business interruption loan. Businesses will not need to make VAT payments until the end of June 2020 since payments are deferred. Businesses have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. The need for personal guarantees for loans up to £250,000 has been removed.
- Bounce-back loans made available https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors The loan will be for 25% of turnover upto a maximum of £50k. Interest for the first 12 months will be paid by the Government.
- Under the Coronavirus Job Retention scheme (CJRS), government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis.
- An online system for making claims under CJRS launched https://www.access.service.gov.uk/login/signin/creds.
- Income Tax payments due 31 July 2020 under the Self-Assessment system have been deferred to 31 January 2021, automatically without any applications needed.
- Cash grants of up to £30,000 have been allowed for small businesses depending on rateable values (The grant for companies with a rateable value of less than £15,000 has been increased to £10k). Here is some more information on rates. The Government has published guidance to Local Authorities on who is eligible. See this guide
- HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments. Breathing space is therefore given to SMEs around paying taxes
- A tax break on national insurance contributions. 500,000 people will no longer have to pay this tax. Those who still have to pay will save around £85 a year.
The Corporate Insolvency and Governance Act has been enacted that stops landlords forfeiting leases, issuing petitions or statutory demands where rent has not been paid due to Coronavirus. This is all good news for tenants struggling to pay the rent but it should be noted that it does not mean the liability has gone away...In fact, the debt will increase and interest charged will add to this. It is likely thought that a deal can be arranged with your landlord given the circumstances
You can read the latest advice and guidance from government for businesses on its coronavirus pages, and by keeping up to date with the news (information for other areas such as Wales and Ireland can also be seen on key news outlets). HMRC have a dedicated phone number for the coronavirus helpline targeted at businesses and the self-employed: 0800 024 1222.
- Business and mortgage customers do not have to pay back the capital on their loans for a period of 3 months, meaning they will only be paying the interest on their loans
- Extension to overdraft facilities
- Barclays and Natwest announced (26th March 2020) that they will NOT be requiring a personal guarantee on Business loans of less than £250k
- Commercial banks are NOT paying dividends to shareholders to preserve cash
- Santander launched a £40m fund, via its Fintech provider Ebury, to provide loans to SMEs
- The Bank of England pump £100bn into the UK economy to help fight the ''unprecedented'' coronavirus-induced downturn. The BOE also made an emergency cut to interest rates from 0.75 to 0.1 per cent
- HSBC, Barclays, Santander and Natwest announce a number of supportive measures for its customers
- Morrisons announced that suppliers with between £100k and £1m turnover will be paid immediately on presentation of their invoice. Over £1m turnover the term will remain 60 days. Companies with less than £100k must wait 14 days
- Aviation industry suffers leaving airlines to reduce capacity
- Businesses i.e. hotels and supermarkets look to offer the vaccine
- All businesses able to open are advised to return to work in a Covid secure way
- Tens of thousands of England’s retail, leisure and hospitality firms have been made exempt from paying any business rates in the coming year (eligible for the ‘tax holiday’)
- There is a package for the self-employed
- Businesses with less than 250 employees can reclaim the cost of having to pay Statutory Sick Pay whilst eligible employees take the 14 isolation days off, due to the coronavirus. Those who are not eligible to sick pay (the self employed) are able to claim Employment and Support Allowance from the first day of illness rather than having to wait until day eight. An online service has been launched by HMRC for SMEs to recover Statutory Sick Pay Payments they have made to their employees amid the pandemic; The Coronavirus Statutory Sick Pay Rebate Scheme. Employers can use the service to make their claims, allowing them to receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13 March 2020. More information can be found here.
- An 'eat-out-to-help-out' scheme was launched in August, offering a discount of £10 per head on all meals out, Monday-Wednesday in August at participating restaurants. Some restaurants continued this on into September.
Devolved Regions of UK, Scotland, Wales and Northern Ireland
- Since the start of the pandemic Scottish Government support for business and the economy has reached almost £3 billion
- The Scottish Government launched a website and helpline for small businesses struggling to cope. They also announced a £320m support package for affected businesses
- The Scottish seafood sector received a package of more than £5 million in financial support during the COVID-19 outbreak
- The Northern Ireland Executive announced a £367m package of grants to provide funding to around 30,000 businesses in Northern Ireland
- Northern Ireland based businesses with a rateable value of up to £15,000 can access a COVID Small Business Grant of £10,000.
- Liverpool's metro mayor announced a £400,000 support package for the region's music, film and TV industries. A fund will provide up to £10,000 in grants or loans to support small and medium-sized businesses in the music sector. Companies working in film or TV will be able to apply for investments of up to £25,000 per project to help them through the pandemic.
Regulations, Employment and Insolvency Law
Companies are legally entitled to cancel holidays due to staffing shortages. However, they must give notice equivalent to the length of holiday. If an employee cancels their holiday, the company does not have an obligation to allow them back into work if they have made alternative arrangements. Be aware that you can lay off staff without resorting to redundancies. For more information on this see the Government site.
Being an employer you may be worried about your rights and duties, The Federation of Small Businesses has a useful page with advice on this here.
If you need to make employees redundant during furlough then make sure you do it properly and don't rush it.
The government has enacted the Corporate Insolvency and Governance Act which allows up to a 20 day moratorium, extendable with creditors permission which stops creditor actions against a company struggling due to the pandemic. The act also means that Landlords cannot forfeit leases or issue winding up petitions against companys that cant pay their rent due to the pandemic until 31st March at the earliest.
Companies House has said that companies have an extra 3 months to file their accounts due to Coronavirus.
For further information regarding winding up petitions and their temporary ban see here: DLA Piper
How can businesses mitigate their problems?
In all honesty, the best advice for businesses is to follow the same advice given to the general public...keep an eye on what is happening in your local area/country and be sure to follow the measures suggested.
How can we help?
We have numerous guides of options you can look into to help...download our CVA experts guide here or view our pre pack page. If you feel you must close down permanently then see our page here on liquidation. If you are in the hospitality industry we do have a rescue guide, not specific to the current situation but still relevant.
Meanwhile, if you have any serious concerns about cashflow then you can make use of some of our tools for free. Prepare a cashflow forecast using our template here, regularly updating it as this will help wish cash planning. Remember to be realistic. The more realistic you are the better you will see a true reflection of your future cash situation, any deficiencies to be able to address any issues in advance.
Company Rescue have been providing services to distressed company directors for over 20 years and we will continue to try and help businesses of all shapes and sizes through what could be, a very turbulent, few months.
If you have serious concerns about the ability of your company to pay it’s bills and survive beyond the current situation please do give us a call, FREE on 0800 9700539.
Amid this crisis, we are all working from home so can answer your enquiries as normal. We also have a 24 hour online chat service on this website, manned by real people, not robots. If our chat team are unable to answer your questions straight away, then within a few hours one of our experienced team members will call you, listen to your concerns and offer some advice and suggest steps you can take.
How can we help?
We have numerous guides of options you can look into to help...download our CVA experts guide here or view our pre pack page. If you feel you must close down permanently then see our guide here on liquidation. If you are in the hospitality industry we do have a rescue guide, not specific to the current situation but still relevant.
We also have a full 80 page worried directors guide which you can now download for free.
Please note that the guide was written pre Covid-19 and there are some likely changes to insolvency rules regarding wrongful trading. Please see this page here.
Meanwhile, if you have any serious concerns about cashflow then you can make use of some of our tools for free. Prepare a cashflow forecast using our template here, regularly updating it as this will help wish cash planning.
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide includes updates due to Covid-19 For instance there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.